We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

Cooperation on competition: ACCC and MOFCOM sign MOU

The Australian Competition and Consumer Commission (ACCC) and the Ministry of Commerce of the People’s Republic of China (MOFCOM) have signed a memorandum of understanding which paves the way for increased cooperation between them and more efficient reviews of cross-border transactions and investigations.

ACCC Chairman Rod Sims and MOFCOM Anti-Monopoly Bureau Director-General Shang finalised the MOU in Beijing on 22 May 2014. The MOU allows for information-sharing between the two regulators, subject to confidentiality and privacy restrictions under the laws of each of country.

The implementation of the MOU will involve regular collaboration and meetings between the regulators. It has been welcomed by Australia and China as an important step in facilitating more open relationships in the Asian region, particularly in relation to regulation of global mergers and cartels. The ACCC and MOFCOM will be able to collaborate on the definition of markets and in developing theories of harm, assessments of potential impacts and merger remedies.

Mr Sims, speaking at a competition law conference in Beijing, commented that the increase in cross-border deals between Australia and China means that collaboration between the ACCC and its Chinese counterpart is crucial, especially given the size and importance of the Chinese economy relative to Australia and the growing global importance of the Chinese competition regime. Currently, approximately 30% of Australia’s exports are sold to China.

Merger control in China

MOFCOM is one of three competition regulators in China and is responsible for merger reviews as well as formulating foreign trade policy, export and import regulations, foreign direct investments, trade agreement negotiations and consumer protection enforcement. The ACCC already has an MOU with the State Administration for Industry and Commerce (SAIC) (which is responsible for non-pricing monopoly conduct), but is yet to form an MOU with the third Chinese antitrust agency, the National Development and Reform Commission (NDRC) (which is responsible for pricing monopoly conduct).

Unlike Australia, China’s Anti-Monopoly Law requires a merger filing where certain thresholds are met. The thresholds are met where at least two of the parties to a transaction earned revenue in China of more than RMB400 million (approximately USD 66 million) in the previous fiscal year and where the global turnover of the parties to the transaction during the previous fiscal year exceeded RMB 10 billion (approximately USD 1.7 billion), or where the combined total revenue of the parties to the transaction exceeded RMB2 billion (approximately USD 331 million) in China during the previous fiscal year and at least two of the parties’ turnover in China exceeded RMB 400 million (approximately USD 66 million) during the previous fiscal year. Importantly, a merger filing is necessary even when a transaction does not relate to China or would be unlikely to have any effect on any part of the Chinese economy.

More transactions will require notification in China as the number of companies doing business in China grows, many of whom also have Australian operations. It is hoped that the MOU will make merger reviews involving both the ACCC and MOFCOM quicker and more efficient. Mr Sims noted that “for both countries, the MOU recognises the importance of cooperation in the field of competition regulation.”

Increasing cooperation and enforcement of competition laws in Asia

The MOU follows a visit from a senior delegation of MOFCOM officials to Canberra in December 2013.

Increasing cooperation between competition regulators has been a trend for some time with regulators interacting through organisations such as the International Competition Network, as well as under the umbrella of more general organisation such as the OECD. The MOU signed by the ACCC and MOFCOM adds to a growing web of bilateral and multilateral treaties and agreements providing for cooperation in competition enforcement activities around the globe.

In our experience, cooperation between competition regulators may be helpful as it may assist regulators to avoid imposing inconsistent remedies or conditions on transactions and to finalise reviews in a more timely manner.

However, increased cooperation may also result in increased enforcement activities.

Under the MOU, companies that are subject to review by the ACCC should expect the ACCC to notify MOFCOM of any transaction which requires a filing under China’s Anti-Monopoly Law. Each agency will also alert the other to competition concerns which might otherwise have been overlooked or not considered.

The ACCC continues to take a prominent role in the development of competition policy, laws and practices in the Asian region. A Competition Committee was established late last year under the ASEAN-Australia-NZ Free Trade Agreement. The Committee provides a framework for ongoing engagement between the ACCC, the NZCC and ASEAN agencies and had its first meeting in November. The AANZ FTA has also funded two expert secondees from the ACCC to the Vietnam Competition Authority and the Malaysia Competition Commission to build those agencies’ capacities to enforce their national competition laws and the ACCC has delivered investigation skills training courses to the Vietnamese agency and the Office for Competition, Department of Justice in the Philippines.

The ACCC has announced that it will be finalising further MOUs with other competition agencies in the region in the near future.

Companies doing business across the Asian region should expect growing enforcement capability from the various competition agencies. We predict that a lack of regulation or enforcement capability in particular jurisdictions will soon be a thing of the past.

When released publicly, the MOU will be available on the ACCC website.

Compare jurisdictions:Merger Control

"Lexology is one of the few newsfeeds that I do actually look over as and when it comes in - the information is current; has good descriptive headings so I can see quickly what the articles relate to and is not too long."